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2015 (5) TMI 753 - AT - Income TaxPenalty U/s.272A(2)(k) - whether appellant has not deliberately and consciously deposited the TDS amount in time? - Held that - We do find that the penalty so levied by the AO and confirmed by the learned CIT(A) appears to be leaning more on holding assessee in default for such penalty as a mechanical/ automatic levy insofar as it is the Department itself, who has insisted the e-filing of such returns as late as making the assessee literate about the data to be uploaded on the basis of tax deducted at source already given credit to by the I.T. Department on the basis of TDS certificates furnished by the assessee namely the deductee. The bonafide is established beyond doubt when the very fact that the quarterly returns for more than four quarters and less than eight quarters were filed simultaneously on the same date when assuming but not accepting that the assessee in default become suddenly computer literate. Concluding, we observe that it is only a question of delayed filing of the e-TDS quarterly return, which was entrusted to an authorized service provider and the delay has occurred unintentionally. The assessee deductor is law compliant and the delay occurred only due to the reason that the assessee deductor is dependent on information of TDS and its deposit from the sub treasury of the Government and filing of e-return through the designated service provider of Income-tax Department. The assessee deductor has no technical competency to file the return by itself without external aid. The assessee is also not competent to do so by itself as per rule 37B and Filing of Return of Tax deducted at source scheme 2003, which requires the submission of quarterly statement through NSDL or other approved agencies i.e third party, not under the control of the assessees. There is neither any willful negligence nor any malafide on the part of the assessee in the matter of compliance and the delay was due to reasonable cause, the default being beyond the control of the assessee deductor. It is at best a technical or venial breach of the provisions of the act or where the breach flows from a bonafide belief that the assessee is not liable to act in the manner prescribed by the statute. The penalty u/s 272 (A)(2) cannot be levied in a routine manner. Law is well settled that a bonafide breach cannot lead to a penalty u/s. 272(A) Hindustan Steel Ltd. Vs. State of Orissa (1969 (8) TMI 31 - SUPREME Court) . - Decided in favour of assessee.
Issues Involved:
1. Legality and arbitrariness of the order. 2. Reasonable opportunity of hearing. 3. Imposition of penalty under Section 272A(2)(k) of the Income Tax Act. 4. Consideration of reasonable cause for delay. 5. Calculation of penalty. Detailed Analysis: 1. Legality and Arbitrariness of the Order: The assessee contended that the orders passed by the Learned Addl. CIT (TDS), Bhubaneswar were illegal, arbitrary, unjust, and excessive. The orders dated 19/03/2014 imposed penalties for the Financial Years 2009-10 and 2010-11, relevant to the Assessment Years 2010-11 and 2011-12, respectively. 2. Reasonable Opportunity of Hearing: The assessee argued that they were not afforded a reasonable opportunity of hearing before the orders were hastily passed on 19/03/2014. This was claimed to be a violation of natural justice, making the orders arbitrary and illegal. 3. Imposition of Penalty Under Section 272A(2)(k): The imposition of penalty was challenged on the grounds that it is a quasi-criminal proceeding. The assessee argued that the authorities failed to establish that the delay in depositing the TDS amount was deliberate and conscious. The penalty imposed was Rs. 80,960/- for A.Y. 2010-11 and Rs. 60,166/- for A.Y. 2011-12. 4. Consideration of Reasonable Cause for Delay: The assessee maintained that there was a reasonable cause for the delay in filing the returns/statements, which should have been considered, and the delay condoned. The imposition of the penalty without considering the reasonable cause was deemed illegal. 5. Calculation of Penalty: The assessee claimed that the calculation of the penalty under Section 272A(2)(k) was not made properly, making the order liable to be quashed. Tribunal's Findings: Legality and Arbitrariness: The Tribunal examined the penalties imposed by the JCIT (TDS), which were based on delays of 3888 days for A.Y. 2010-11 and 2995 days for A.Y. 2011-12. The penalties were calculated at Rs. 80,960/- and Rs. 60,166/- respectively. The Tribunal found that the penalties were imposed mechanically without considering the reasonable cause for the delay. Reasonable Opportunity of Hearing: The Tribunal noted that the assessee had not been afforded a reasonable opportunity of hearing, which was a violation of the principles of natural justice. Imposition of Penalty: The Tribunal observed that the penalties were imposed without establishing that the delay was deliberate and conscious. The Tribunal referred to the decision of ITAT, Cuttack Bench in the case of Garrison Engineer (I) R & D Vs. ACIT (TDS), which held that penalties cannot be imposed without considering reasonable cause under Section 273B of the Act. Consideration of Reasonable Cause: The Tribunal found that the delay in filing the e-TDS statements was due to the assessee's dependence on external service providers and the technical challenges associated with e-filing. The Tribunal concluded that the delay was unintentional and due to reasonable cause. Calculation of Penalty: The Tribunal noted that the penalties were calculated without proper consideration of the reasonable cause for the delay. The Tribunal emphasized that penalties under Section 272A(2)(k) cannot be levied in a routine manner and must consider the bona fide reasons for the delay. Conclusion: The Tribunal concluded that the penalties imposed were not justified and allowed the appeals for the respective Assessment Years. The penalties levied under Section 272A(2)(k) were cancelled, considering the reasonable cause for the delay in filing the e-TDS returns. Result: Both appeals for the respective Assessment Years were allowed. The penalties levied under Section 272A(2)(k) were cancelled.
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